Here's why it costs $500,000 to change a letter on the ancient Centrelink computer system

The computer system used to make Australia’s welfare payments, including unemployment benefits, is so old and outdated that it can take six months work and cost about $500,000 to change a letter template.

The Income Security Integrated System (with the unfortunate acronym ISIS) has about 30 million lines of code which hardly anyone in the world uses except in a handful of government mainframes, mainly in the US. Those who can write the code are getting older and closer to retirement.

The system was developed for Australia in the late 1980s, based on a Model 204 database management system first used commercially in 1972.

It’s been called a Walkman-era computer system, and a “turbo-charged Commodore 64”, being used in an era where complex payments can be made and received from smartphones.

Social Service Minister Scott Morrison said the system was built with around 2.5 million people receiving payments and now there are up to 10 million.

“This is a system that still has manual processing attached to it and it has been left to basically wither for many years,” he said today. “The system we are working off was developed in the 80s at a time when frankly the internet and things like what we are looking at today with smart phones and so on were dreams.”

Making changes to the mainframe system takes time and money. It can’t talk to other departments, such as the Australian Tax Office, and can’t automatically check whether payments have been made.

The National Commission of Audit said: “It is written on now defunct information technology codes, is inflexible and expensive. The system adds significant costs for processing payments, maintaining the ICT system, producing letters and responding to appeals and reviews, and it increases the need for debt recovery. The current ageing system poses a significant risk to a core function of government.”

A replacement system will cost between $1.2 billion and $1.5 billion. The Commission of Audit said it sees little option but to make the investment for “such an important and complex IT infrastructure project”.

The system has grown as a patchwork over almost 30 years, tracking changes in welfare payments.

McClure’s review said redeveloping the computer system in conjunction with income support payment reform is necessary for Centrelink to provide simpler, easier to manage claims and support services.

A new system would make change in circumstance updates easier and enable greater use of current technology such as downloadable apps.

“The ability to capture and integrate real time data, particularly income data from the ATO, would significantly reduce reporting requirements for people receiving income support and reduce the likelihood of debts being incurred,” McClure’s review said.